Search form

TRENDING:

Czar tells Congress not to meddle in autos

The Obama administration's auto czar on Tuesday said political interference
by Congress could jeopardize the bailouts of General Motors and Chrysler.

Ron Bloom, a senior adviser at the Treasury Department heading the
administration's efforts on autos, warned members of a House Judiciary
sub-panel that an intervention by Congress on behalf of auto dealers would
set a "dangerous precedent" that could raise enormous legal concerns.

ADVERTISEMENT

Bloom and the rest of the administration are worried about efforts in
Congress to thwart plans by the two companies to close thousands of
dealerships across the country. The House last week approved legislation to
stop the closures, and a bill in the Senate is gaining sponsors after a
heavy lobbying campaign by dealers, who are influential players in local
communities across the country.

Members of Congress don't understand why seemingly successful dealerships in
their districts, which sometimes are also seen as local community pillars,
are being targeted for closure.

Rep. Steve Cohen (D-Tenn.), who chaired Tuesday's hearing, wonders why John
Roy's Chrysler dealership in his district was terminated. Roy was the only
African-American Chrysler dealer within a 300-mile radius around Memphis,
and won business from four states. He was No. 1 in sales in the Memphis
metropolitan area, but was still terminated.

"To me, it is unconscionable that Chrysler would treat a successful and
loyal dealer in such a manner," Cohen said in an opening statement.

In testimony on Wednesday, GM and Chrysler will say they have too many
dealerships and that this cuts into their costs. GM had roughly 6,000
dealerships in the U.S. compared to 1,240 for Toyota before its bankruptcy
filing. It will still have more dealerships when it emerges, according to
testimony to be offered on Wednesday.

Bloom said the actions by Congress could make if more difficult for the two
troubled companies to emerge from their bankruptcies, specifically by making
capital markets wary of offering them money for fear Congress might overturn
"judicially approved business decisions any time that it disagrees with the
judgments of the companies."